The Process of Buying Real Estate in Mexico Q&A



Once you have made the decision to buy a property in Mexico the next step is to secure a Real Estate Agency to represent you in the process. 

Buying a property in Mexico is something that you want to be a positive experience – after all you are doing it to move and live-in paradise.  To help you start off on the right path I have compiled a brief summary of the main points of the real estate process in Mexico.  Some of the numbers I am quoting will change slightly but it will give you an overall snapshot of what the process is and the costs involved.


Q: Can I own property near the ocean?
 Yes, this can be done through a bank trust. The parties involved are the seller (trustor), the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary (Fideicomisario.)

Q. What is the cost of bank trust?

A: The opening fee is roughly $400 USD, along with an annual fee for the first year which is around $500. After that, an annual fee of around $500.

Q: What is the purpose of the trust?

A: A foreigner cannot legally own coastal properties in Mexico (within 50 km of the coast) so the title of the property is put into a trust with a Mexican bank. The bank plays the role of trustee. The property buyer becomes the Beneficiary in the trust. Those rights are recorded by a Notary.  If you are the beneficiary, you can sell your property without constraints. You will need to assign an alternate beneficiary at the time of the purchase (in the event of your death) as the Mexican laws require this.

The trust can be renewed for an infinite number of 50-year periods, if the bank trust administration is not changed.

Q: What documents are necessary and who oversees them?

A: The public notary processes and certifies all documents. This includes all official documents to transfer ownership. This includes a no-lien certificate (which comes from a complete title search of the public property registry). You need a property statement from the municipality, water bills, statements for any taxes that might be due, and a property appraisal for tax purposes.

  * It is important to note that the Notary is an impartial entity and does not give advice to or represent the buyer or the seller.  It is the buyers/seller’s responsibility to have their own legal representation.  Quite commonly the real estate company will give recommendations on a good closing lawyer to provide your best interests are being considered.

Q: Can anyone buy my property if I want to sell it?

A: Yes, and if the buyer is a foreigner, you can assign your trust rights. If the buyer wants to get a new trust with their bank, they can do so. And if the buyer is a Mexican national, trust can be reassigned to the new buyer.

Q: What happens if the buyer is a foreigner? What happens to the 50-year period?

A: The buyer can take over an existing trust and renew or extend it for another 50 years after the current trust expires.

Q: Who pays the closing costs when a property is sold?

A: Normally, the transfer of acquisition tax, the notary’s fees and expenses and all other closing costs are paid by the buyer. The seller pays the broker’s commission and the capital gains tax.

Q: What is the percentage of the transfer tax?

A: Between 2-4% of the tax appraisal value.

Q:  Are there property inspectors in Mexico and is it worth having a property inspected?

A:  Yes - there are a number of property inspectors available to perform inspections.  They perform a similar inspection to what the American/Canadian inspectors do and give an overall rating of the property condition including structural, electrical, gas, plumbing in the form of a document that can be kept for future reference.    

Q: What can you expect to pay for closing costs? How much are closing costs?

A: These vary from 3-5% of the sales price.

Q: How long does it take to buy a home?

A: 45 to 60 days with a bank trust. For Mexican nationals, about a week.

Q: How is payment made?

A: Funds are held by a third-party escrow service. The seller manages the funds.

Q: What is the cost of the escrow account and who pays it?

A: The escrow account will cost approximately $750 USD for the setup fee and is paid by the buyer

Q: Who represents the buyer in the process to make sure their best interests are being taken are of?

A:  The real estate brokerage representing the buyer will protect their interests.  When dealing with an accredited real estate brokerage they are bound to an Ethics code and regulations to represent their clients fairly and confidentially.  The brokerage will help negotiate the purchase between the buyer and seller and then once a purchase agreement has been made, they will guide the buyers through the process providing advice, market comparisons, recommendations and provide any required instructions and information in a professional manner.

Q: Does the buyer need to pay any real estate commissions or fees?

A: The real estate commissions are paid by the seller.  It is not usual for the buyer to  pay any real estate fees.  This is not regulated and some agents may ask the buyer to pay additional fees. (For example: a for sale by owner where the agent is only representing the buyer and the seller does not want to pay for real estate fees the agent may ask the buyer for a commission)


*In summary you should budget the purchase price of your property PLUS 6.5 % for a total cost of buying a property in Mexico. (This includes the escrow, trust, Notario fees, transfer tax, etc)




There are many definitions to cover real estate transactions. We present a few of them here.


Official Appraisal: This is a professional document which gives an estimate of the property value based on sales of other homes nearby. This appraisal is often required by a lender to make sure the mortgage isn't higher than the value of the property.

Notary Fees: These are the fees of the notary public who is retained for processing documents necessary for the sale of the property. 

I.V.A.: This is the value added tax of Mexico and applies to real estate transactions. It has been in force since 1980. The current rate is 16%.

Property Taxes: The property tax is charged by local municipal government. It is used to fund municipal services such as schools, or maintenance of the street. It is often derived from a formula which uses the assessed property value.

Capital Gains Tax: This is where the seller must pay capital gains tax on the profit, which is the difference between the purchase price and the sales price.

Title Insurance: This is in place to protect the lender or home buyer from any claims that arise about the property. Many lenders expect buyers to purchase this insurance in case of loss or errors.

Title Search: Where the public records are searched to ensure the existing owner has no outstanding liens or claims against the property.

Escrow: This is where an impartial third-party service is used to safeguard the money and the funds will be transferred only after certain instructions are honored. When the escrow entity is satisfied with the instructions, the funds are transferred to the beneficiary.

Mexico’s Foreign Investment Law: This law allows fee simple (direct) ownership of non-residential properties in restricted areas. The property must be owned by a Mexican corporation and it must be used for non-residential purposes. The law also extended the fideicomiso term of residential properties to 50 years, up from 30. It also includes a renewal upon request from a party with interests in the property.

Fee Simple: If a 100% foreign owned Mexican company wants to acquire property, it can do so, so long as the usage must be industrial or commercial.

Mexico’s Restricted Areas: According to the Mexican constitution, this is an area which is 100 kilometers from any Mexican border and 50 kilometers from the coast. Since the Baja is so long and narrow, the entire peninsula is part of the restricted zone. If you want to buy this type of property, you must use a Mexican bank trust (fideicomiso) if you are a not a Mexican.


This is not mandatory however it is highly recommended as real estate purchasing is never a straight forward process here in Mexico. 


Having a qualified, AMPI (The Mexican Real Estate Association) trained representative who has access to all the professional resources available through the real estate association will assure that your real estate purchase process happens smoothly and timely.


My services as a brokerage only start with the viewing of properties.  Once I have helped with the selection process there is a huge diligence process to make sure the deal is legitimate.  I determine if the seller has legal authority to sell the property and is informed of the potential Capital Gains Taxes applicable in advance of the deal.   In the case of pre construction sales we do our diligence to determine if the developer has the financial capacity to follow through with the development and has all building permits and contracts required through the entire construction and has a proven track record of delivering as promised. 


At the delivery I am  closely involved to make sure there is a smooth transfer of ownership to the buyer with full services installed, utilities transferred to buyers names, and has fulfilled all aspects of the agreement.